Almost 85% of young adults believe buying a home is much harder for them than it was for their parents. Paying for college also fell into this category. This isn’t surprising as 17.3 million Americans under 30 have student loan debt.
It may make saving for the future seem impossible for this age group. This is also another goal that 80% of young adults believe is harder for their generation. The key to overcoming this is learning how to build wealth in your 20s.
Is this even possible? Read on to find out. This article provides you with a comprehensive wealth building guide.
What It Means to Build Wealth
The value of your tangible and intangible assets minus your debts is a measure of your wealth. However, even if this value is significant, you may not be wealthy. It all depends on your net worth.
According to Charles Schwab, this year, an average net worth of $2.2 million would make you wealthy. But you could also be comfortable financially with a net worth of $774,000.
How to Build Wealth in Your 20s
The 20s are the best years of your life. That’s at least what most Americans in their 20s and younger believe. Adults in their 30s and 50s don’t quite agree.
Perspective usually shifts with age. But creating stability while in your 20s can make it a decade to remember if you:
Lower Your Expenses
First create a budget. It will keep you accountable by giving you a clear picture of how much you spend monthly. It should also help you cut back on specific areas.
You can put the money previously spent on luxury buys into savings. Having a budget should help you focus more on living expenses and less on splurging.
Control Your Debt
Budgets can also help you control your debt. Less than 5% of US adults in their 20s own a home. Yet the average debt of this age group is close to $30,000 – mostly credit card and student and vehicle loans.
Unfortunately, all three have high-interest rates. Making at least the minimum payment on these help. Consider a facility that consolidates your debt, so you pay a lower interest rate.
Increase Your Income
Build your skills to build wealth. Developing your knowledge and skills base can help increase your income. This usually entails earning additional income through a “side hustle.”
This takes time and effort but can help you reduce your debt and save. A secondary income is even better if it’s passive, such as an affiliate website or eBook revenue.
Pay Your Future Self
Your aim is to build wealth in your 20s. Doing this helps you secure your financial future making it the perfect time to start building your investment portfolio.
Uncertain about the financial market? Get insights from a reputable source or consider hiring a financial advisor. You can also start retirement savings through an IRA or your company’s 401K.
Setting Yourself Up for Success
You should now have a clearer idea of how to build wealth in your 20s. There’s no doubt being a part of this age group today is a far cry from previous generations at that stage. However, there are still ways to secure your financial future, as your parents may have before you.
It starts with consistently doing the activities listed above. This takes discipline and commitment, but it will pay off in the long run. You also need to keep an eye out for new opportunities that can help you build wealth.
Figuring Out Money can help. I provide you with access to trade ideas and give sound financial advice. You can contact me to learn more.
